Delivering 100% defect-free mortgages has always been a big challenge for lenders. Sometimes errors do happen at the very initiation of the mortgage loan and tend to be overlooked. For instance, lenders tend to prohibit loan officers from providing disclosures for some vested interests. This does nothing to ensure that the MLO has originated a mortgage that can be closed. To make matters worse, these mistakes do get caught late in the process.  When this happens it either leads to starting the process all over again or changing approval or disapproval decisions after the fact. Listed below are all that lenders and MLOs need to do to make Mortgage QC integral to the origination stage.

Best Practices for Lenders to Tighten Mortgage QC Right from the Origination Stage

Let MLOs and underwriters get on the same page through direct communication channels.

Some lenders do not want their MLOs to ‘disturb’ their underwriters because it will take more time for the loan to get processed and wastes resources in the process. However, this means that any new or additional information that comes in will not get passed on effectively, leading to much irritation on the consumer’s part.

Ensure lenders better monitor the sources of MLO errors and develop policies to minimize their occurrence.

One such way to do that would be by appointing more experienced MLOs as advisors to newer MLOs as a matter of policy. 

Record and monitor the exact reason why each poorly originated loan failed to close, to help other MLOs not make the same mistake and to provide remedial actions.

By taking a more proactive approach to reducing the number of loans that fail to close, the lender ensures that quality standards are met, while also providing MLOs with instructions on how to rectify the situation.

Better vet loan officers prior to letting them originate by having them take open book tests.

It is important that new loan officers are properly vetted and trained to help them bring value to the organization and eliminate loan origination errors entirely. By having these officers take tests to determine how they would handle different scenarios or how they would apply certain guidelines to the processing of their applications, lenders could prevent poor quality work from bringing down their system.

To minimize human error and prevent wasting valuable resources with respect to loans that cannot be closed, it is vital that lenders take a step back to reassess whether the systems they currently have in place are hurting or helping them. By implementing better quality controls at the origination stage, it becomes easier for them to separate the wheat from the chaff and ensure bad loans are siphoned out of the pipeline early on in the process.